Home owners are cashing in on the value of their property

HOMEOWNERS are unlocking the wealth tied up in their homes at record rates, figures show.

Homeowners are currently experiencing some of the cheapest mortgage deals

The average amount of equity withdrawn by re-mortgaging hit a high of £34,500 per borrower in May.

Householders were spurred on by some of the cheapest mortgage deals ever offered.

Property conveyancers LMS pointed to record lows in interest rates on home loans which fell to a typical 2.49 per cent.

Annual re-mortgage payments now account for less than a fifth of household income.

More than a third of borrowers who re-mortgaged in June opted to increase the size of their loan to release cash.

Andy Knee, chief executive of LMS, said: "The fact that families need to free up cash within their property, rather than using their own savings, implies economic improvements are still to register for many people."

But he urged caution: "In such a situation, even a minor increase in the interest base rate is bound to put a squeeze on pockets and borrowers need to prepare themselves."

Separate data from the Bank of England shows the mortgage market heating up.

The number of homeloans approved to buyers climbed three per cent month-on-month in June.

Some 66,582 mortgages with a total value of £11.5billion were approved for house purchase - higher than the longer term average of 62,971 monthly approvals.

he fact that families need to free up cash within their property, rather than using their own savings, implies economic improvements are still to register for many people

Andy Knee, chief executive of LMS

Meanwhile, 36,620 re-mortgage loans worth £6billion were also approved in June, which is also above the longer term average of 33,759 loans being handed out.

"There are signs consumers are now rushing to replace their existing deals and cut their repayments while they still can," said Brian Murphy, head of lending at the Mortgage Advice Bureau.

"Despite the holiday season approaching, we are likely to see a burst of transactions continue into the second half of the year following Mark Carney's comments about an early base rate rise, as more people look to secure a loan before the curtain comes down on the era of low-cost mortgages."

In a further indication of how competitive the mortgage market has become, the total number of mortgage products surpassed 14,000 for the first time in over six years to reach a post-recession high, according to the MAB.

Last week, the British Bankers' Association reported an increase in the number of people re-mortgaging and put it down to savvy borrowers taking advantage of competitive deals on fixed-rate mortgages ahead of a possible rise in interest rates.